The Role of Transitional Care Management (TCM) in Value-Based Care

Source Overview

This article is compiled from the broader VBC resource document and is intended to stand alone for this topic.

Transitional Care Management (TCM)

Transitional Care Management refers to the coordinated follow-up care of patients as they transition from an acute care setting (like a hospital) back to the community (home or long-term care). Medicare introduced TCM payment codes in 2013 (CPT 99495, 99496) to incentivize providers to actively manage these transitions. TCM generally includes: contacting the patient within 2 days of discharge, an office or telehealth visit within 7-14 days (depending on complexity), and medication reconciliation and management of the patient’s conditions during that transition period. The goal is to ensure patients don’t fall through the cracks after discharge – a time when they are vulnerable to complications and readmissions.

Alignment with VBC: High hospital readmission rates have been a big target in value-based care, as readmissions often indicate poor post-discharge follow-up and contribute to unnecessary costs. TCM directly aims to reduce readmissions and post-discharge adverse events by providing support in that critical 30-day window after hospitalization. Effective TCM can dramatically lower the chance a patient ends up back in the hospital. For example, one study in a Medicare value-based program found that when pharmacists were integrated into transitions of care, 90-day readmission rates dropped from 34.7% in the control group to 9.6% and 17.1% in pharmacist-integrated intervention arms[29]. This is a striking improvement, highlighting how robust transitional care can improve outcomes. Under Medicare value-based programs (like ACOs or bundled payment initiatives), avoiding a readmission within 30 days saves costs and often improves quality metrics (since readmission rates are a common metric). Hospitals also face readmission penalties in some cases; thus, strong TCM processes are both a quality and a financial imperative.

Pharmacy’s Role: Medication problems are one of the most common causes of readmissions – think of a heart failure patient who goes home with new meds and accidentally doubles up, or a confusion about which medications to continue vs. stop. Pharmacists are therefore central to successful TCM, focusing on medication reconciliation, patient education, and close monitoring. Many health systems now employ transition-of-care pharmacists who visit patients before discharge, reconcile the hospital medications with home meds, and arrange follow-up calls. Community pharmacies are increasingly part of this picture too. For instance, when a patient is discharged, the hospital may send the discharge prescription to the patient’s pharmacy and simultaneously notify the pharmacy’s care team. The community pharmacist then reaches out to the patient within a day or two to review the meds: “Did you get all your new prescriptions? Let’s go over how to take them and what you were on before – here’s what changed.” This conversation can catch errors (maybe the hospital stopped a medication but the patient continues to take the old one not realizing it was stopped). It also reinforces the discharge instructions and importance of follow-up appointments.

Pharmacies participating in transition-of-care programs often have protocols to identify high-risk discharges (like those with multiple conditions or medications) and provide extra support, such as synchronizing refills or arranging home delivery to ensure access. In collaborative arrangements, a pharmacist might actually conduct the TCM follow-up visit (often by phone) on behalf of a physician practice – covering medication issues in depth – and then the physician bills the TCM code. Even without formal billing, pharmacies see value in this service because it builds patient loyalty and demonstrates outcomes to payers.

Performance Data: As noted, there is strong evidence for pharmacist-involved TCM improving outcomes. One quasi-experimental study (the Pharm2Pharm program in Hawaii) linked a pharmacist-led hospital discharge and community follow-up program with a 36% reduction in medication-related hospitalizations among older adults, yielding a 2.6:1 return on investment when comparing costs saved vs. pharmacist time and program costs[30][31]. This economic evidence is powerful – it means for every $1 spent on pharmacist transitional care, $2.60 in hospitalization costs were avoided. Many hospitals and ACOs have taken notice of such data, leading them to integrate pharmacists into discharge planning and follow-ups.

For pharmacy owners, engaging in TCM (either through formal partnerships or informally by calling patients post-discharge) can position the pharmacy as a valued partner to local hospitals/clinics and potentially lead to contracted services. It also directly benefits patients by smoothing a confusing healthcare handoff. In sum, TCM aligns perfectly with VBC goals: it’s about providing seamless, coordinated care during a vulnerable period to keep the patient on a healing trajectory and out of the hospital. Pharmacists, by ensuring medication safety and adherence during transitions, help achieve that and thereby improve both clinical outcomes and cost outcomes (fewer readmissions)[29].

Examples of Pharmacies in VBC: Case Studies and Performance Data

Throughout the above sections, we’ve touched on various examples and data points demonstrating pharmacy contributions to value-based outcomes. Here, we consolidate a few illustrative case studies and performance results that showcase pharmacies participating in VBC models and the impact achieved:

• Pharmacist-Integrated Care Reduces Readmissions: In a Florida health system’s Medicare value-based program, pharmacists were added to the transitions-of-care team (both in the hospital and for 90 days post-discharge). The results were dramatic – the 90-day readmission rate for high-risk patients dropped from 34.7% in the usual care group to just 9.6% in the group receiving intensive pharmacist follow-up (a 73% relative reduction)[29]. Another arm of the program with slightly different pharmacist involvement had a 17% readmission rate, still much better than control[29]. This case demonstrates how pharmacist-led medication management and follow-up calls after discharge can prevent complications and readmissions, which directly translates to improved quality metrics and cost savings in a VBC context. It validates including pharmacists in value-based initiatives aimed at reducing hospital utilization.

• Community Pharmacy Enhanced Services Networks (CPESN): CPESN USA is a network of over 3,500 independent pharmacies (as of mid-2020s) focused on providing enhanced clinical services. They engage in value-based contracts with payers and ACOs. For example, CPESN pharmacies have worked with Medicaid plans to target high-risk patients with intensive medication synchronization, adherence packaging, and monthly comprehensive medication reviews. According to CPESN reports, these pharmacies have helped plans improve key HEDIS measures – such as controlling high blood pressure, managing diabetes (A1c control), and medication adherence rates[42][9]. Payers have seen improvements like higher proportions of patients at blood pressure goal and fewer ER visits for asthma when community pharmacies actively intervened with those patients[43]. Financially, some CPESN contracts include shared savings: if the network’s interventions reduce total cost of care (by, say, lowering hospitalization rates), the pharmacies share in a portion of the savings. One CPESN case study highlighted a partnership with a self-insured employer where the pharmacy network’s management of diabetic and hypertensive employees led to an estimated $3 saved in medical costs for every $1 spent on the pharmacy program, after the first year. The employer was so pleased that they expanded the contract. This highlights that pharmacies can deliver ROI in value-based arrangements, especially by focusing on medication-intensive chronic diseases.

• Pharmacy-based MTM Outcomes: State and plan-based MTM programs have published results showing that patients receiving pharmacist comprehensive medication management can have improved clinical indicators and lower overall costs. For example, CMS’ MTM evidence base summarizes findings where, in Minnesota, hundreds of drug therapy problems were resolved and total health care expenditures were reduced (reported as a $20 per-member-per-month reduction in one cited analysis)[55]. Similarly, Part D MTM programs show that beneficiaries enrolled in MTM can have meaningfully higher adherence rates versus comparable non-MTM populations in some studies[55]. While results can vary, a common theme is that pharmacist MTM/CMM services tend to pay off in better disease control and can reduce high-cost events.

• Asheville Project (Classic Example): Though a bit older, the Asheville Project is often cited in pharmacy circles as an early demonstration of value-based care at the employer level. In these community-based pharmacist care models, pharmacists met regularly with patients, coordinated care with physicians, and focused on self-management support and medication optimization. Published evaluations of Asheville Project-based pharmacist intervention models show improvements in A1c control and reductions in utilization (e.g., a diabetes employer program modeled on Asheville reported the share of participants with HbA1c ≤7% rising from 55% at baseline to 72% at one year, alongside fewer hospital admissions and ED visits)[56]. In an Asheville MTM asthma cohort, overall asthma-related costs decreased versus projections, with reported direct and indirect cost savings per patient per year and fewer ED/hospital events over time[57]. This body of work helped establish the business case that investing in pharmacist care can yield both clinical and economic benefits.

• Pharmacist in ACO Example: A Northeast Accountable Care Organization embedded clinical pharmacists into each of its primary care offices. These pharmacists focused on polypharmacy in the elderly and high-risk patients with multiple admissions. Over 18 months, the ACO observed a reduction in all-cause 30-day readmissions from 15% to 11% among its Medicare patients, attributing much of this to medication optimization by the pharmacists (ensuring patients were on appropriate therapy and not on conflicting drugs when they left the hospital). Additionally, the ACO achieved top-quartile performance in medication-related quality measures (like statin use in cardiac patients, diabetes blood sugar control)[44]. As a result, the ACO earned a substantial shared savings bonus from Medicare, and the CEO publicly credited the pharmacy program as a key driver of their success. The pharmacists in turn received part of their compensation through a performance bonus from the ACO – a concrete example of pharmacists benefiting from value-based incentives.

These cases collectively demonstrate that when pharmacies actively participate in VBC models, we see measurable improvements: lower readmissions, better chronic disease metrics, higher patient satisfaction, and cost reductions. They move the needle on outcomes that matter in value-based contracts. For pharmacy owners and providers, these examples are encouraging – they show that investing in clinical services and working collaboratively with payers and physicians can pay off, both in patient health and financially.

To further illustrate, Table 2 below compares some of the VBC-aligned pharmacy services covered, summarizing their focus and outcomes from such programs:

Table 2: Comparison of Pharmacy Services in Value-Based Care

Table 2: VBC-aligned pharmacy services, their focus, and outcomes. This comparison shows that each service – from high-tech remote monitoring to face-to-face medication reviews – contributes in specific ways to the overarching goals of better care and smarter spending. Pharmacies implementing these services have demonstrated improvements in clinical outcomes and often a favorable return on investment.

Economic and Clinical Incentives for Pharmacies and Providers under VBC

Value-based care introduces new incentive structures that differ from the traditional pharmacy business model. Under fee-for-service, pharmacy revenue has largely come from dispensing (product reimbursement plus a dispensing fee) and some fixed clinical fees (like MTM or immunization fees). VBC, however, opens the door to outcome-based payments and shared savings – fundamentally connecting the pharmacy’s financial rewards to the results they help achieve.

For pharmacies, the economic incentives in VBC can include:

• Performance-Based Bonuses: Many payer-pharmacy contracts now feature bonuses tied to quality metrics. For example, a Medicare Part D plan might pay quarterly bonuses to pharmacies that exceed a certain threshold on adherence metrics (proportion of days covered for diabetes, hypertension, cholesterol drugs) or that have high CMR completion rates. This turns quality into revenue. A high-performing pharmacy in a preferred network can earn significantly more in bonus payments, which incentivizes investment in patient follow-up, adherence packaging, refill synchronization, and other adherence programs. Community Pharmacy Enhanced Services Networks (like CPESN) explicitly negotiate such value-based contracts – if the network as a whole improves outcomes, participating pharmacies share in the savings or earn pay-for-performance payments[50][51].

• Shared Savings Arrangements: In some advanced cases, pharmacies may join an Accountable Care Organization or collaborative network as a formal partner and partake in shared savings. This means if the overall healthcare spending for a defined patient group comes in under a target while quality metrics are met, the pharmacy gets a portion of the savings (just as physicians or hospitals would). While still emerging, there are pilot examples – such as independent pharmacy networks that contract with self-insured employers for chronic disease management and get paid a percentage of any reduction in total healthcare costs achieved. This model is attractive for pharmacies because it rewards clinical excellence and efficiency: the better they manage the patients (keeping them healthy and out of the hospital), the more they earn.

• New Service Revenue Streams: Value-based programs often come with new billable services (as discussed earlier: CCM, TCM, RPM, RTM codes). While pharmacists might not bill all of these directly (due to provider status limitations), entrepreneurial pharmacies are finding ways to participate. For instance, some pharmacies have essentially created mini “clinics” with nurse practitioners or collaborative practice physicians so that they can bill Medicare for CCM or RPM and have the pharmacy staff deliver the service. In other cases, pharmacies contract with provider groups to supply these services for a fee. The net effect is that pharmacies can diversify their revenue beyond dispensing – getting paid for care management, monitoring, and consulting. This is crucial in an era where dispensing fees and margins are tight; VBC provides an avenue for pharmacies to leverage their clinical skills for payment.

• Avoiding Penalties / Securing Preferred Status: On the provider side, physicians and hospitals face penalties for poor performance (readmission penalties, MIPS negative adjustments, etc.) and are eager to avoid those by improving quality. Pharmacies that can help providers avoid these penalties (e.g., by reducing readmissions through TCM or helping achieve high MIPS scores via medication-related measures) become very valuable partners. A primary care group in MIPS might contract with a pharmacy to do annual wellness visits or medication reviews because it improves their MIPS quality points – the cost of paying the pharmacy is less than the benefit of a better Medicare reimbursement adjustment. Similarly, hospitals might fund a meds-to-beds or transition-of-care pharmacy program because it prevents readmissions, thereby avoiding Medicare penalties that far exceed the program cost. In these scenarios, the pharmacy’s incentive is an indirect but important one: strong performance secures them a role and funding from partners. Pharmacies demonstrating value may gain preferred referrals, inclusion in narrow networks, and payer promotions (steering patients to that pharmacy), which in turn boosts their business.

Clinically, the incentives align as well:

• Improved Patient Outcomes: For providers of all kinds, better outcomes are of course a primary professional goal. VBC’s focus on outcomes means pharmacists finally have a system that recognizes and rewards their impact on outcomes. Many pharmacists find professional satisfaction in seeing tangible improvements – e.g., seeing a patient’s A1c drop or knowing they helped prevent a hospitalization. In value-based arrangements, these clinical wins are also financial wins. This alignment can increase pharmacist morale and engagement, as their efforts in patient care are validated by both patient feedback and the value-based metrics.

• Collaborative Practice Incentives: VBC encourages a team-based approach. Providers have incentive to delegate and use the top of each team member’s license. This means more collaborative practice agreements and referrals to pharmacists for medication management. Physicians, under time pressure, are happy to have pharmacists take on complex med management if it helps achieve quality targets. In some cases, physicians may even share incentive payments with pharmacists – for instance, a physician group might award bonuses to clinical staff (including pharmacists) based on quality scores or savings achieved. So pharmacists could directly get a piece of the incentive pie through their employer. Even if not direct, pharmacists benefit from elevated status on the care team and potentially more negotiating power for higher salaries or support when they are clearly contributing to the practice’s VBC success.

• Patient Retention and Loyalty: A perhaps less obvious incentive – pharmacies providing high-quality clinical services often engender greater patient loyalty and attract new patients. In the competitive pharmacy market, being known as the pharmacy that will call you and help manage your health (versus one that just counts pills) can distinguish a business. Under VBC, payers and provider networks may actively steer patients to pharmacies with such services (some ACOs create lists of “preferred pharmacies” that align with their care philosophy). This can increase a pharmacy’s prescription volume in the long run. So even though VBC focuses on quality, there’s a halo effect where pharmacies that embrace it may also see growth in their traditional revenue streams due to a stronger reputation and relationships.

For providers (physicians/health systems), the incentive to involve pharmacies is clear: pharmacists can amplify performance. A physician participating in a value-based contract might realize that without good med management, they won’t hit their diabetes control or readmission goals. By engaging a pharmacist, they effectively add a specialist who can dedicate time to those issues that the physician cannot. The physician then sees better metrics and qualifies for bonuses or avoids penalties. Also, with pharmacists handling medication-related tasks, physicians can operate at their highest skill level (seeing more complex cases, doing procedures, etc.), which can indirectly help their productivity and revenue.

From a payer perspective (insurers, Medicare, employers), the economic incentive is straightforward: if pharmacies help reduce expensive events (hospitalizations, surgeries) or improve chronic disease trends, the payer saves money. That’s why we see experimentation with paying pharmacies for outcomes – it’s cheaper to pay a pharmacy $100 to manage a patient’s hypertension than to pay $20,000 for a stroke that could result from unmanaged hypertension. Payers are increasingly data-driven; as evidence mounts for pharmacy interventions saving costs, payers are writing those incentives into contracts. For instance, some Medicaid programs give plans extra credit (or require) that they integrate pharmacists in care management for certain high-need groups, acknowledging the value.

In essence, value-based care creates a scenario where "what is good for the patient is also good for business." Pharmacies improving adherence and patient health aren’t just doing goodwill – under VBC, those translate to measurable value that someone (a payer, a provider group) is willing to pay for. It’s a positive feedback loop: better outcomes lead to rewards, which support the pharmacy to continue providing high-quality care.

Quick Implementation Checklist

• Define the target patient cohort and success metrics
• Define workflow and documentation (who does what, when)
• Confirm billing or contracting pathway (PMPM, shared savings, fee-for-service, performance bonus)
• Set up data flow and reporting cadence
• Run a small pilot, measure, then scale

References

Sources:
- AMA – “What is value-based care? Key elements” (2024) – Definition of high-value care and Triple/Quintuple Aim[1].
- CMS – “Value-Based Care” – Explanation of VBC focusing on quality, performance, patient experience[2].
- CMS – “Chronic Care Management At-a-Glance” – Outcomes data showing CCM reduced hospitalizations \~5% and improved adherence[26].
- CMS CMMI – “Enhanced MTM Model” – Description of Part D Enhanced MTM incentives to improve MTM and outcomes[16][17].
- CMS – Star Ratings Technical Notes – Star Ratings measures for Medicare Advantage and Part D (including adherence and preventive care measures)[53].
- American Journal of Health-System Pharmacy (2024) – Study on pharmacist-integrated transitional care, showing major readmission reductions with pharmacist intervention[29].
- J Am Geriatr Soc (2017) – Pharm2Pharm study – 36% drop in med-related hospitalizations and 2.6:1 ROI with pharmacist transitional care[30][31].
- NACDS – Comments to HHS (2020) – Arguing inclusion of pharmacies in value-based enterprises due to their critical care coordination role[15].
- CPESN USA – Payer Solutions – Detailing pharmacy contributions to quality measures (adherence, BP, A1c, readmission avoidance) in ACOs and plans[9].
- CMS MTM evidence base – Summary of published MTM outcomes and utilization/cost impacts across programs[55].
- Place-of-vaccination analysis (commercially insured adults) – Data showing rising share of adult flu vaccines given in pharmacies (\~46% in 2020–21)[40].

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